Tuesday, 1 August 2017

Nigerian Economic Recovery through Industrialization and Diversification by Public and Private Sector Synergy

By Ehiedu Iweriebor

The current economic crisis and recession in Nigeria has brought to the fore what is already known: that the existent Nigerian national economy is not organized for internal self-propulsion and autonomous economic and business activities. The Nigerian economy, since independence, has been operated by the maintenance of the neo-colonial system of development incapacitation, primary commodity export, dependency and poverty generation.

Its basic and long-standing focus has been on the expanded production and export of primary commodities, such as agricultural products like palm oil, groundnut, cotton, cocoa, rubber in the 1960s and 1970s and subsequently crude oil since the 1970s. But as raw material export depends on external demand, it does not activate autonomous and secure economic activity. Therefore, the Nigerian economy has no internal capacity for mass production and self-propulsion. It is a large, unfree, dependent and unviable economy.

It is well established globally that successful national economic development is a function of domestic technology capacitation and industrialization, agricultural modernization and mineral exploitation, beneficiation and use by local industries for the mass production of value-added goods. Therefore, economically successful countries focus on expansive industrial development to achieve self-actuated development, mass production and domestic prosperity generation. This is the path followed by old and new advanced societies.

The current campaign for economic diversification also demonstrates the backwardness of Nigeria, officially thought as its primary prescription to move from one exported mineral raw material – crude oil to agricultural raw materials like yam and rice export. But those are all raw materials whose demand depends on buyers, and not sellers. Against all global historical evidence and the nation’s own experience that raw materials production and export does not promote any form of advanced development, Nigerian leaders in the 21st century remain arrested in the 1960s imagery of groundnut and cocoa pyramids and barrels of palm oil, as Nigeria’s economic golden age.

However, in order to achieve effective economic recovery, an enlightened and ideologically autonomous Nigerian state, and especially its Ministry of Industry should actively promote economic diversification through mass industrialization and the production of manufactured goods for the home and export markets. This can best be achieved by proactively identifying catalytic industrial development projects and programmes that will yield a variety of new industrial products. In this context, a good example of this possibility is to promote large, medium and small scale endogenous investors to utilize the intermediate goods from the catalytic plants that will generate a multiplicity of manufactured products for internal use and export within and outside Africa.

The best approach for achieving this is to survey the entire national investment environment and identify catalytic, local resource-based projects that have the potential to foster broad-based industrialization and national economic diversification for internal use and export of value added goods. Today in Nigeria, the best example of forthcoming critical catalytic projects that can contribute to national industrial development and serious economic diversification are the Dangote Petroleum Refinery, Petrochemical and Fertilizer complexes under construction in Lekki, Lagos.

These plants will not only supply their basic goods like refined petroleum, petrochemicals and fertilizer; the intermediate products of these plants if recognized and effectively promoted by the Nigerian state and especially the Ministry of Industry, Trade and Investment can transform Nigeria into a vast centre of the production of value-added petrochemical products that will convert Nigeria into an economic power house in the petrochemical sector. This can be illustrated by identifying the modern products that can be converted into manufactured products from the intermediate products of the petroleum refinery, petrochemical complex and the fertilizer plants.

For example, the petroleum refinery in addition to its basic products such as Petrol, Diesel, Jet Fuel, and Kerosene, will also produce Slurry for Carbon Black. In addition to the direct benefits of the beneficiation and utilization of domestic raw materials – crude oil and natural gas, each of these projects has the potential to generate a multiplicity of cognate manufacturing industries that would use their products as feed-stock or intermediate raw materials for production of new products.

The petroleum refinery for instance, in addition to its basic products will also produce Slurry which is used in the manufacture of Carbon Black. Carbon Black is used in making of tires and numerous other rubber products including for example belts, hoses, gaskets, bushings, wiper blades, conveyors and others. It is also used in plastics and electronic products, for coatings and for making toners and printing ink. In short, just from Carbon black a whole range of critical manufacturing industries can be developed to deepen Nigeria’s manufacturing economy. With the current expansion of computers and printers; toners and printing inks are in very high demand and are all imported into Nigeria. And much of Africa. Thus, carbon black can be used to develop an expansive toner and printing ink industry to serve Nigeria and the vast African market.

Petrochemicals are usually derived from petroleum and natural gas. They are usually classified into three major groups: Olefins, Aromatics and Synthesis Gas. Olefins include ethylene, propylene and butadiene which are used in plastic and synthetic rubber industries. The primary products of the Dangote Petrochemical Plant are within the Olefin sub-group, specifically polypropylene and polyethylene - collectively known as polymers. They can provide the intermediate materials requirements of the entire domestic plastics manufacturing industry. With their availability, Nigeria’s plastic products manufacturing industry would no longer be dependent on the importation of feedstock and there would be a guaranteed and secure domestic source of raw materials supply. The production activities of the plastic subsector manufacturers will now be unconstrained by foreign exchange shortage. Some products made from Ethylene include garbage bags, camera films, milk crates, bags and other products.

All these ancillary industries will contribute to expanded manufacturing production in the various sub-sectors of the plastics industry and other economic activities and the generation of substantial employment opportunities.

In the light of these potential impacts of the Dangote Petrochemical complex on industrialization and economic diversification, a nationalist and pro-active Federal Ministry of Industry, Trade and Investments should now be actively organizing workshops, seminars and awareness programmes across the country, complete with ready-made project profiles for large, medium, small and cottage level Nigerian industries to prepare to start their factories as soon as the petrochemical plant takes off.

This is how a proactive and patriotic Ministry of Industry, Trade and Investment, as well as other MDAs that are primarily committed to Nigeria’s interests should work to advance Nigeria’s development. This would be in complete contrast to the current posture and vocation of Nigerian MDAs which now works for the World Bank and implements its anti-development dogmas, policy and programmes diktats that render Nigeria prostrate.

The fertilizer plant will produce ammonia and urea, intended primarily for agricultural production. However, it is important to note that numerous other industries can be established with the use of urea as feedstock. For example, UREA is used in making paints, adhesives, polyurethanes, pharmaceuticals, such as toothpaste, cosmetics, flame proofing, acid, fabric softeners, cattle feed, formaldehyde and as an additive to paper, board and plywood; for surface coating, moulding resins, leather coating, textiles and for products that reduce noxious emissions in diesel engines. In short, a multiplicity of fine chemical industries can be developed from the products of the fertilizer plant.

Thus, with the availability of this feedstock from the various refinery, petrochemical and fertilizer plants, there is clearly potential to create a multiplicity of basic and ancillary industries, all of which will contribute to the country’s advanced economic development.

Taken together with all these by-products made from intermediate products of the petroleum refinery, petrochemical and fertilizer plants, it is actually feasible to develop Nigeria as one of the primary global and African centres of the mass production of basic petrochemicals and their by-products like plastics and hundreds of other derivative chemicals. In this way, and with these value-added products, Nigeria would move into the league of industrially developed countries that sell and export diverse manufactured goods, rather than agricultural and mineral raw materials. These would help diversify country’s revenue streams away from dependence on raw materials export. More fundamentally, it would put the country on the pathway of economic freedom and self-actuated development, development capacitation, mass production, mass employment, export of value-added products, domestic prosperity generation and national empowerment.

Ehiedu Iweriebor, Phd, is a professor of history in the Department of Africana and Puerto, Rican/Latina Studies, Hunter College, City University of New York, USA.